Update on the Latest Supply Chain Crisis Heading Into the Holiday Season

The conditions of the supply chain leading up to the holiday season are nowhere near ideal. However, retailers can position themselves for success by evaluating their current supply chain.

By:
Rakuten Super Logistics
-
eCommerce News

From the unexpectedly prolonged pandemic to the increasing truck driver shortage years in the making—the US supply chain is in disarray. Consumers are starting to notice, and retailers are starting to panic. We spoke to our resident expert on all things freight, Bob Kruse, to get his insight on the current state of the supply chain and his advice for retailers during this challenging time. Bob is RSL’s SmartFreight Manager and a seasoned logistics expert, with over 30 years of experience in transportation and operations management.

What changes have you seen in your day-to-day because of these issues?

Capacity shortages in the TL (full truckload) and LTL (less-than-truckload) sectors have caused significant delays and/or embargoes of areas. Specifically in LTL, the COVID protocols that were enacted have led to personnel disruptions and often backlogged facilities. These issues cause additional time and energy tracking freight, keeping customers updated, and navigating when and where the next trouble spot is for a carrier. It is also extremely difficult to negotiate any relief from carriers since they already have more freight than their strained infrastructure can handle.

How is the current state of the supply chain impacting clients and online retailers?

In addition to some of the previous comments, carriers are limiting service by geography, freight profile, and profitability. They are in the driver seat and any freight that is, in their eyes, undesirable in many cases is being turned away and customers are faced with difficult decisions on moving freight outside of their normal parameters. Significant port back-logs and carrier transit delays are slowing time to inventory, and shortages of certain commodities only exacerbate these problems.

Can retailers do anything to overcome these challenges?

There needs to be a better idea of where chokepoints exist (both at the manufacturing and distribution levels and in the physical world) so these can be addressed, eased, and overcome. Determining where challenges have existed and occurred over the past year and creating strategies to understand and repair these problems is critical. We see a lot of legacy fragmented technology that has been undervalued. Having a modern integrated ERP system can help to minimize disruption and allow a better chance to survive disruptions. In addition, retailers and manufacturers need to place an emphasis on dedicating resources to their supply chain management team. Many companies that have understaffed or overlooked this department in the past are now taking a closer look at how to build this up.

What long-term implications will these current issues have on supply chain, imports, and planning?

Organizations will have to consider supply chain contingency plans, a restructuring that will address the immediate and unexpected disruption to their supply chain. There will need to be overhauls and regulations enforced throughout each tier of the supply chain based on risk assessment at each tier and how quickly the organization could recover from supply obstruction. If you have an essential part produced by a supplier that is deep in the supply chain these suppliers would inherently be more a high-risk category, supply chain tech and processes will have to evolve to allow strategic shifts from low-cost focused infrastructures to systems that facilitate visibility and flexibility throughout the entire supply chain process. The IT department, the network will need to be adaptive to respond rapidly and efficiently to fluctuation in supply chain to keep up with demands. The new model will have to be forward-thinking and broaden the scope of potential influences that impact supply and demand in their perspective markets especially when companies are dependent on suppliers deep in the supply chain.

The conditions of the supply chain leading up to the holiday season are nowhere near ideal. However, retailers can set themselves up for the future by evaluating manufacturing and distribution bottlenecks and putting in place a supply chain contingency plan. To address the immediate situation, communicating with consumers is key. Rob Tillman, VP of Operations, speaks on this here.

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Rakuten Super Logistics is a leading eCommerce order fulfillment company that provides the scalability, flexibility, and cost savings retailers demand.

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